Mr Chairman, members of the panel, ladies and gentlemen.
 

Introduction

Firstly, my thanks to Chamber of Indian Industry (CII) and to the Bar Association of India for the opportunity to speak today.

Secondly, I should state that I am not now, nor have I ever been a lawyer. I am merely someone who has spent too much time in the company of lawyers for my own good.

The regulation of telecommunications serves as a substitute for competition.

Once competition is in place, telecommunications can become like other sectors with little or no sector-specific regulation.

To succeed, there must be regulatory certainty. Potential market entrants need a known risk, as must those who invest in them.There is more than enough danger in the shifting technological sands and in the uncertain and unpredictable reactions of consumers, without adding ambiguity in regulation.

Telecommunications regulation is in addition to the horizontal legislation which applies to all sectors of the economy. This includes:

• company law
• competition law
• consumer protection law
• data protection law

The old adage is that justice delayed is justice denied. In telecommunications this poses a very special problem. It is a sector moving at a remarkably rapid pace, much faster than traditional sectors.

Yet lawyers do not work in Internet time, they work to a pace determined by the need for checks and balances. They have a tradition going back centuries. A judgement handed down in four years may be satisfactory in the steel industry or in the markets for textiles, but in the telecommunications sector it is an eternity.

While the lawyers and the courts work away at a case, the litigants may have been driven into insolvency.

I can think of one exception. In the Netherlands, during the auctions for 3G spectrum, there was a twenty minute interval between rounds of bids. The judge to whom it fell to provide injunctions made himself available at a few minutes notice in case it was necessary to stop the process. He gave the parties his fax number and GSM number. I know that to traditionalists, it sounds a bit like dial-a-judge or 1-800-JUSTICE. However, it is indicative of the pace of the technological world.

It is only the incumbent operators that can and do sit out those long waits, dragging over years. It is part of their strategy, which is not 3G but 3D:

• deny
• delay
• degrade

INTUG

The International Telecommunications Users Group (INTUG) combines the interests of national associations and corporate users of telecommunications. We represent those users, including Indian users and users in India at:

• ITU
• APECTEL
• CITEL
• European Union institutions
• OECD through participation in BIAC

You have to remember that it is users who ultimately pay the bills.
 

World Trade Organisation

One of the surprising features of the telecommunications provisions of the WTO General Agreement on Trade in Serviceds (GATS) is that countries have made voluntary commitments. Usually, they do so only after painfully long negotiations and concessions by rivals. The WTO is not accustomed to countries agreeing without having beaten, if only metaphorically, their opponents to a bloodied pulp.

Telecommunications is a refreshing change. It is seen as area where unilateral commitments are economically beneficial.

The Reference Paper requires the operation of a genuinely independent regulator with appropriate powers.

It also requires the regulator to be able to offer interconnection from foreign operators to all major domestic operators:

• at any technically feasible point in the network
• in a timely fashion
• on non-discriminatory and transparent terms (including quality and prices)
• in a sufficiently unbundled manner to allow interconnectors to avoid charges for unnecessary components
• at non-traditional interconnection points if requestor pays extra charges.
• procedures must be made public
• agreements or model interconnection offers of major suppliers must be made public

INTUG hopes that all countries in the WTO will sign up to the GATS and in particular to the telecommunications annex and reference paper in full and without reservations. Many countries have already done so and have proven their positive effects on the telecommunications sector and the economy as a whole.
 

European Union

The European Union has a long history of de-regulation of telecommunications. INTUG has been involved with that, since the 1970s. At the end of 1998 the European Union made a substantial shift towards competition in markets, including reingin in the powers of the incumbents.

The legislation in question required the European Commission to conduct a review, the so-called 1999 Review. In some respects the outcome was necessarily going to conclude that the policy was working and that markets were becoming more competitive. To say otherwise would have been to suggest the earlier policy was wrong.

The proposals that resulted from the 1999 Review saw a significant shift towards competition law.

The European Commission proposed new directives in July 2000 and which will take force in Member states on 25th July 2003. Those interested in such matters can consult the Treaty of Maastricht on the complex processes of adoption of directives and transposition into national law.

A separate Regulation also forced the incumbent operators to unbundle their local loops in order to boost the adoption of broadband. This received political support from the heads of government.

Competition law has a well established place in European Union regulation of telecommunications. For example, in the approval (or not) or mergers, acquisitions and joint ventures. When the mobile sector was engaged in frenetic takeovers, this required repeated assessments of the competitiveness of markets.

Of special concern to INTUG, since we have been amongst the complainants, has been the the sectoral enquiry launched in July 1999. This is in three parts:

• leased lines
• local loop
• international mobile roaming

We expect that later this year the European Commission Competition Directorate-General will find the mobile operators in Europe to be guilty of price fixing and of running a cartel.

We hope to see a substantial reduction in the prices for international mobile roaming and a consequent growth in use.

The new legislative package, with its formalised and forward looking competition law, comprises:

• Framework Directive
• Authorisations Directive
• Access and Interconnection Directive
• Universal Service and Users' Rights Directives

Licensing has, for the most part, been abolished. Operators can work on general authorisations, except where they require the use of scarce resources. The most important of these is radio spectrum. The money raised for licences is to cover only the costs of the regulators.

The provisioning of universal service is now to be broken up into constituent parts and may also be offered to operators in different geographical areas. Then it can be subjected to a reverse auction. That is, operators can bid for a subsidy with the lowest bidder winning.

Famously, when this exercise was run in Chile it resulted in no subsidy being required.

Under the new scheme, the process will be to:

• define service markets
• define geographical markets
• test if each market is (not) competitive
• test for operators with Significant Market Power (SMP)
• decide on the obligations to impose on the SMP operators
• repeat until the market is competitive

Although the concepts are taken from competition law they are often different. Moreover, different member states have their own case law in competition law which may be quite divergent.

The definitions of SMP is completely new. It is no longer the old 25% market share. It is the same as the definition of dominance give in the Treaty of Rome. This includes single and joint dominance. The latter is likely to catch the mobile operators and the broadcasters.

The NRAs will engage in a campaign of consultations. For the most part it will be in the incumbent operators and not the consumers having their say.

One of the most interesting and most contentious decisions has been the market for termination of calls to mobile phones.Operators have pushed up these prices which have not been regulated. Now the market is to be defined not as the United Kingdom, not a national market, but as each operator separately. Consequently, each mobile operator is dominant in its market and subject to regulation.

Interestingly, the same arguments can be applied to the WTO Reference Paper requiring cost-oriented interconnection with all mobile operators.

For those interested, the new Directives are available on the Internet in eleven languages. I made a speech last week on the directives in Elsinore which covers the user perspective.

There will be many lessons to learn from this exercise in regulatory reform. It will be worth studying and you will have the advantage of being at a safe distance. Some of us are more directly involved.

It remains to be seen how willing the European institutions will be to provide additional legal instruments when (not if) errors are found in the new package.
 

Indian Telegraph Act (1885)

The primary telecommunications legislation in India is a true piece of Victoriana, the sort of act to which the Chief Justice referred yesterday.

When Elizabeth Bowes-Lyon was born in 1900, the Indian Telegraph Act was already 15 years old. She died a few weeks ago, having been the fourth and final Empress of India. It is a title which will doubtless live on in a few restaurants and some public houses to give a reflection of a by-gone era.

The Act, which has outlasted her, will soon it will reach its 120th birthday.

It is dangerous in a room full of lawyers to suggest an assisted killing. I am not even sure if euthanasia is legal is India. Nonetheless, I would suggest it is time for this Act to be passed into the history books.

It is hard to believe that something from the era of Mr Gladstone and the Marquis of Salisbury is being used to regulate the transmission of SMS text messages. However, I imagine they would quickly understand the concept of a personalised device for sending and receiving telegrams. They might find downloading video-clips on broadband Internet access more difficult.

The Act was also passed in the year in which the Indian National Congress was founded.

Personally, I am not a fan of converged regulatory bodies. They raise too many difficult and contentious questions about content. Telecommunications is already extremely complicated without dragging in questions of sensitivities to language, cultures and religions.

There are some very serious doubts in the former colonial power, that the UK's proposed Office of Communications (OFCOM) will too easily be diverted into matters of broadcasting. This could absorb its energies and monies with a resulting reduction in the quality of telecommunications regulation.

We had some fun or what passes for fun in the European Parliament in the consideration of new legislation for unsolicited electronic communications. This is a technologically neutral measure covering faxes, electronic mail and the like - electronic communications. The question arose at the time of a general election in Italy in which the future Prime Minister, Silvio Berlusconi, wanted to send SMSs to potential voters encouraging them to go out and vote for him. Consequently, an opt-in scheme, requiring supporters to elect to receive such SMSs was seen as limiting political campaigning. As soon as political questions such as this arise, however they are ultimately decided, it becomes contentious and diverts the discussion.

An alternative to a converged regulator is a merger with the competition authority. In the Netherlands, the telecommunications regulator (OPTA) is to become a special chapter of the competition authority (NMA). Similarly, in New Zealand, a telecommunications regulation function has been added to the Commerce Commission.

Technological neutrality is a vital principle. Users often do not know the technologies being used, they concentrate of quality of service and price.

It is dangerous for governments to back technological horses. Too often they make the wrong choice.

There are different approaches to the regulation of telecommunications in each country. These have to be appropriate to the country.

In the case of India, the priority must surely to be to realise the massive capacity for growth and to do so sooner, rather than later.
 

Conclusions

India is 151st in the world, as ranked by the ITU for 2000, in terms of teledensity. That is a little under four lines per 100 population. The scope for improvement is enormous. There are many countries from which lessons can be learned, from Morocco to Zimbabwe, South Korea to Singapore.

Hong Kong SAR has now reached 97% and is competing with Luxembourg to be first to pass the 100% mark. Admittedly, both are rather special cases.

No country can afford not to be active in learning from others.

Everybody has something to learn and, of course, something to teach.

It is vital to ensure that telecommunications does not become a politico-regulatory game played by the major commercial interests. As competition takes effect, regulation can be a more cost-effectice way for operators to manipulate the market than by actions on the market. There are times when the Regional Bell Operating Companies (RBOCs) in the USA seem to have as a core competence "working the hill", that is encouraging politicians to legislate to make them more successful. Other incumbent operators are little better.

It is a scenario which would exclude the common man and woman and the reality that they face in the market place. Especially, if that reality means not having a phone or even the hope of having a phone in their lifetime. Or having a phone no closer than a walk to a PCO of more than one hour through temperatures such as 46^oC as it is outside or, later in the year, having to walk through the monsoon.

What is needed is competition in infrastructure. Unavoidably, that means regulated and sometime heavily regulated interconnection. It means holding back the incumbent operators. One thing we know for sure is the capacity of incumbent operators to make life difficult and even impossible for competitors.

One of the apparent aims of the execution of Indian policy is to obtain a not insubstantial amount of money from the sector. If this is true and the numbers suggested by earlier speakers seem to confirm it, then it is causing the Government to miss out on considerable economic growth.

The government talks of "revenue sharing" but they mean a tax. Sharing is not supposed to mean constant giving. We ought at least to be direct in what we call it. A tax is not such a bad thing, provided it is fair, transparent and serves a useful purpose.

A crucial question is to ask why there are so few foreign operators and service providers in the Indian market. Global best practice regulation is to be equal handed to all operators, regardless of nationality. It will be important to ensure not just connectivity with the rest of the world, but participation.

Success in all countries of the world is achieved only when the incumbent is constrained. When it has one hand or sometimes both hands tied behind its back. Done properly, the incumbent operators continues to grow. However, the correct regulation allows other market players to survive and to prosper because the market is growing faster and serving more customers.
 

Thank you very much for your attention.
 

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Last updated 10 May 2002.